Cases & Developments

Memorandum and Order Granting Plaintiffs’ Motion for a Preliminary Injunction. Plaintiffs, the Association of American Universities, American Council on Education, Association of Public and Land-Grant Universities, Brown University, California Institute of Technology, Cornell University, Board of Trustees of the University of Illinois, Massachusetts Institute of Technology, Regents of the University of Michigan, Board of Trustees of Michigan State University, Trustees of Princeton University, and University of Rochester challenged the Department of Energy (DOE) and its Secretary Chris Wright for the Department’s cut on indirect cost rates for government-funded research. Plaintiffs sought a Temporary Restraining Order (TRO) to prevent immediate and irreparable injury, which was granted on April 16, 2025, and followed by a hearing on April 28, 2025. Finding that the balance of equities and the public interest favor plaintiffs, the Court noted immense concern with “funding disruptions [that] would compromise crucial safety protocols for handling hazardous materials, high-voltage equipment, and radiation sources, potentially leading to accidents.” The Court subsequently denied defendants’ request for a stay pending appeal, reasoning that defendants offered no argument as to their basis for the stay, nor did they articulate what irreparable harm will result from the Court’s refusal to grant one. In finding a nationwide injunction a reasonable and appropriate remedy, the Court enjoined defendants from implementing, instituting, maintaining, or giving effect to the so-called “Rate Cap Policy” in any form with respect to postsecondary institutions nationwide until a further order is issued by the Court. 

U.S. Department of Defense (DoD) sent a memorandum to Senior Pentagon Leadership Commanders of the Combatant Commands Defense Agency and DoD Field Activity Directors on the implementation of a 15% indirect cost cap on assistance awards to institutions of higher education (IHEs). The memo states that DoD will pursue a lower cap on indirect cost rates for all new financial assistance awards to IHEs, consistent with federal regulation, which is intended to save up to $900 million annually. It also explains that the objective, in addition to saving money, is to repurpose the funds toward applied innovation, operational capacity, and strategic deterrence. The memo directs Under Secretary of Defense for Research and Engineering (USD(R&E)) to (1) notify the Office of Management and Budget of the intent to cap indirect cost rates; (2) develop and publish formal policy guidance that will govern DoD deviations from negotiated rates; (3) ensure the guidance is public and integrated into all upcoming grant solicitations, including Notices of Funding Opportunity; and (4) ensure new awards to IHEs contain the newly established standard cap. The memo directs that within the next 180 days USD(R&E) and DoD Components that manage DOD-funded financial assistance awards must initiate a department-wide effort to negotiate indirect cost rates on existing financial assistance awards to IHEs, wherever cooperative bilateral modification is possible; and that where bilateral agreement is not achieved, to identify and recommend lawful paths to terminate and reissue the award under revised terms.